Reduction in Share Capital

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Amit Singh (Querist)
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01 April 2010 Hi,

I have this practicle problem that & i refer sec 100 on reducion in share capital but i hve following queries

A co. is closely held company by a family
& one of the brother want to sale his share since it closely held co. no outsider buyer will be interested in buying shares & even his family members(brothers) are not willing to buy shares thus is there any way he can take his share of money out from co. & is there any limit to reduce the no of shares to the extent of issued & paidup capital

whter this point of section 100 can be considered for reducing the share of capital in above case

1)either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share capital which is in excess of the wants of the company;

you may assume that co is indifferent about the need of the money

i expect that expert will reply on this topics

Best Regards

Amit

Chandranil

Chandranil (Expert)
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02 April 2010 Mr. Amit ,

Instead of going for Reduction you can go for Buy back of shares under section 77

Here company subject to its reserves as mentioned in the section can buy back its shares, It will help you in both way the member can get money for his shares and other members need not worry as there will be no outside person coming in company

and if u go for section 100 you can reduce the capital but still this person will be member as you cannot reduce value of shares to zero again reduction applies to whole capital so other members Face Value of shares will also which I dont think they will like.

So you can go for buy back which will be safe exit fot that member
refer section 77 77A,77B, 77E of the Companies Act, 1956